Are payday loans legal?
It depends on the state. As of November 2026, 29 states allow payday loans at triple-digit rates, 10 states cap small loans at 36% to 50% APR, and 11 states plus the District of Columbia do not allow payday lending.
The short version
- There is no federal ban or federal rate cap for civilians.
- 29 states permit payday loans under state licensing laws.
- 10 states cap rates low enough that payday lenders do not operate.
- 11 states and D.C. prohibit payday lending.
On this page
Who decides
Payday lending is regulated mainly by the states. Federal law adds disclosure rules, limits on collection practices and a 36% cap on loans to active-duty service members and their dependents, but it sets no general price limit.
Where payday loans are legal
Alabama, Alaska, California, Delaware, Florida, Idaho, Indiana, Iowa, Kansas, Kentucky, Louisiana, Maine, Michigan, Mississippi, Missouri, Nevada, North Dakota, Ohio, Oklahoma, Oregon, Rhode Island, South Carolina, Tennessee, Texas, Utah, Virginia, Washington, Wisconsin and Wyoming.
Rules inside this group differ widely. Ohio, Oklahoma, Oregon and Virginia require longer terms and limit prices, so their loans work more like installment loans. Texas, Utah, Nevada, Idaho, Delaware and Wisconsin set no fee cap. Rhode Island’s 36% cap is scheduled to take effect on January 1, 2027.
Where rates are capped
Arizona, Colorado, Hawaii, Illinois, Montana, Nebraska, New Hampshire, New Mexico and South Dakota cap small loans at 36% APR, and Minnesota caps them at 50%. A two-week loan priced at those rates earns a lender about $1.38 per $100, so payday storefronts have closed in these states.
Where payday loans are not allowed
Arkansas, Connecticut, Georgia, Maryland, Massachusetts, New Jersey, New York, North Carolina, Pennsylvania, Vermont, West Virginia and the District of Columbia. Their usury or small-loan laws set rates far below what payday lenders charge, and several make unlicensed lending a crime.
What about online loans?
A lender must follow the law of the state where the borrower lives. Residents of states that ban payday loans still receive online offers, often from lenders based offshore or owned by tribes. Regulators in those states consider such loans illegal, and the loans may be unenforceable. See tribal loans and payday loan scams.
Federal rules that apply in every state
- Truth in Lending Act. The lender must disclose the finance charge and the APR in writing before you sign.
- Military Lending Act. Loans to active-duty service members and their dependents are capped at a 36% military APR.
- Electronic Fund Transfer Act. A lender cannot make recurring automatic debits a condition of the loan, and you can stop a preauthorized payment through your bank.
- Fair Debt Collection Practices Act. Third-party debt collectors may not harass you, threaten arrest or misstate what you owe.
These rules set a floor. Your state’s law decides whether the loan can be made at all, and at what price.
Check your state
Each state has its own page with the statute, limits, fees and regulator, and the comparison table puts all 51 jurisdictions side by side.
Common questions
Are payday loans illegal anywhere?
Yes. Eleven states and the District of Columbia do not allow them, and ten more cap rates so low that payday lenders do not operate.
Is there a federal law against payday loans?
No. Federal law requires cost disclosures and caps loans to service members at 36%, but leaves pricing for everyone else to the states.
Can I get a payday loan online if my state bans them?
Lenders may offer one, but they are not following your state’s law. Such loans can be void, and regulators advise against them.
Does Northlight lend money?
No. Northlight is an information site. We explain costs and state rules; we do not make loans or credit decisions.
Check the rules where you live
Whether you can borrow, how much, and what a lender may charge all depend on your state.
Sources
Keep reading
- Can payday lenders sue you?Yes, a payday lender can sue over an unpaid loan, but it needs a court judgment to garnish wages. Learn the process, the limits and your defenses.
- If you can't repayMissed a payday loan payment? Here is what lenders can and cannot do: fees, bank debits, collections, lawsuits, and how to stop the damage.
- Credit card cash advanceA credit card cash advance costs a 3% to 5% fee plus a higher APR with no grace period. See the real cost and how it compares with a payday loan.
- Payday loan scamsUpfront fees, fake debt collectors and unlicensed lenders: learn the most common payday loan scams and the checks that confirm a lender is real.
- How payday loans workA step-by-step look at payday loans: applying, the fee, the due date, rollovers and what happens if you cannot repay on time.
- Payday loan APR explainedWhy a $15 fee equals a 391% APR, how to calculate the APR on any payday loan, and what fees can be added on top of the finance charge.